The US-Iran conflict has now persisted for 97 days, with a peace agreement remaining elusive. Although tensions have eased on the Israel-Lebanon front, are expected to remain elevated, sustaining inflationary pressures for an extended period. Additionally, the global economy continues to experience adverse effects from trade tariffs imposed by the Trump administration in 2025.
The tussle between the US and Iran has resulted in the choking of the Strait of Hormuz since the beginning of this truce between them, causing global energy crises and elevated global stagflation fears, which might be a challenging task for global central banks.
Most of the advanced economies have stepped in to defend their weakening currencies by hiking interest rates, while the others are likely to follow the same path to tackle the surging inflation; the developing countries, with fewer options, have started to sell some part of their gold reserve.
A Bloomberg analysis suggested the Reserve Bank of India (RBI) may have sold approximately $12 billion of gold in mid-May 2026 to protect forex reserves and support the amid Middle East tensions.
However, the RBI and the Indian government officially rejected this report, while RBI data shows the share of gold in India’s overall foreign exchange reserves actually rose from 13.92% in late 2025 to 16.85% by late May 2026.
Undoubtedly, this confirms that the choking of the Strait of Hormuz has finally pushed the panic button two days back, and now some more central banks could follow the same path if the U.S. President Donald Trump keeps this conflict as it is without reaching any peace deal.
The US and Israel launched strikes against Iran on 28 February. Iran responded by attacking Israel and US-allied states in the Gulf, and effectively closed the Strait of Hormuz, a vital waterway for global shipping.
In April, the US announced it would impose a blockade on ships traveling to or from Iran’s coast.
The US and Iran reached an initial ceasefire agreement on 8 April.
Despite that agreement, the US has struck Iran in recent days, with Tehran responding with strikes on Kuwait, a US ally. Ahead of the vote, Trump again asserted that negotiations to end the war are going “very well” and could be finalized as soon as this weekend.
On evaluating the movements of the on daily chart, I find that despite trading in a narrow range since opening on Thursday, gold futures are still in a selling zone as currently below the immediate resistance at the 9 EMA ($4,524) which has already come below the 100 EMA ($4,623), along with 20 EMA ($4,568), forming a “Bearish Crossover”.
I find that gold futures could take a selling spree in today’s session during the last hours, and the surging weakness could grow on Friday to push gold futures to test the next support at the 200 EMA ($4,310), as attention is now turning to U.S. economic data, particularly Friday’s closely watched nonfarm payrolls report.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is solely based on observations.
